ST. LOUIS — The union representing nearly 2,500 workers at Boeing Co. plants in the St. Louis area said Friday it was preparing to go into mediation with the aerospace company to try to avoid a strike.
“The company was putting stuff on the shop floor that they had reached out to the union and we had not reached back,” which was untrue, said Jody Bennett, chief of staff of the International Association of Machinists and Aerospace Workers.
“I called the mediator and said, ‘hey, we’re prepared to mediate to try to reach an equitable agreement and try to prevent a work stoppage,’ ” Bennett added.
About three hours after that phone call, Bennett said he was told that Boeing was willing to meet. Boeing didn’t immediately return a message seeking comment. Federal Mediation and Conciliation Services would preside at the talks, Bennett said. A mediator in St. Louis declined comment.
Members of International Association of Machinists and Aerospace Workers District 837 voted July 24 to strike the Boeing Co. (NYSE: BA) in the St. Louis area, starting Monday.
IAM District 837 said the aerospace company “previously took away a pension from our members, and now the company is unwilling to adequately compensate our members’ 401(k) plan.”
Boeing rejected that contention, pointing out the union voted to do away with the defined-benefit plan when it ratified its last contract in 2014. Also, the 401(k) plan offered to the union last week is the same one for all of its non-union employees, the company said.
The dispute is rooted in the decades-old effort of large companies to replace traditional defined benefit plans, which typically provide a specified monthly benefit at retirement, with 401(k) retirement savings plans, which don't provide a set amount and can be subject to stock market volatility.
Retirement issues are making negotiations with unions more volatile as big companies like Boeing — which phased out defined benefit plans about eight years ago — propose changes in contributions to 401(k) plans and matching amounts, said Bob Bruno, a professor of labor and employment at the University of Illinois Urbana-Champaign.
“The 401(k) is an insecure retirement plan. It's predicated on what the stock market and investments are at the point you retire. There's far more risk in a plan like this and it’s harder to bargain. You're going to have conflicting views as to how good of a plan it is,” said Bruno, who also is director of the university’s Labor Studies program.
Starting in the late 1970s, U.S. companies replaced traditional pensions for 401(k) plans, which cut long-term costs and shifted the risk of market volatility to their employees.
“It’s a common theme in the defense industry,” said George Shapiro, managing partner of a New Jersey-based research firm who has tracked the aerospace industry for decades. “The whole purpose of the 401(k) is it puts more of the onus on the individual as opposed to guaranteeing a benefit that Boeing has to fund over a long period of time. So Boeing certainly would be generous in terms of 401(k) contributions.”
Of public and private sector employees with workplace retirement plans, about 66% solely have defined-contribution plans such as 401(k)s. Those with defined benefit plans consists of 16% of workers, and 18% have both types of plans, according to the Employee Benefit Research Institute, a nonprofit group based in Washington, D.C.
The union said in Boeing's latest three-year contract offer, the company proposed reducing its percentage of contribution to the 401(k) plan from 4% to 2% in each of 2023 and 2024 and then stop making automatic contributions.
The offer also included Boeing matching dollar-for-dollar up to 10% of base and incentive pay. Boeing said it has provided a 75% match of the first 8% that employees put into their 401(k).
Bruno said a central question is why the machinists union is mobilized now over the retirement issue.
“Is it a younger workforce that now has come to depend on these 401s, but now they're feeling insecure and that's combining with a more senior workforce who always thought the defined plans were best?” he asked.
Bennett, of the machinists union, said Friday: “(Boeing) stole defined benefit. Now they’re trying to steal the automatic contribution to the 401(k) and put the onus on retirement on the members.”
Read the rest of the story on the St. Louis Business Journal website.